THE majority of Welsh SMEs expect to achieve profit and sales growth in the next financial year without increasing the size of their workforce, according to new research.

A report by Deloitte shows 86% of Welsh companies predict an increase in their profitability in the coming year, with 57% not expecting to experience growth in employee numbers.

The companies were surveyed as part of the Deloitte Growing Pains' business confidence survey in association with the Institute of Directors.

John Foster Thomas, partner in charge at Deloitte Wales, said, "Businesses view improving productivity as a key to increasing profitability.

"The fact almost 90% of SMEs in Wales are predicting increased profitability, suggests they are confident the economy is becoming more favourable.

"To achieve this profitability companies are evaluating their existing resources and starting to manage them more effectively.

"In addition to this, it is hardly surprising that 57% of Welsh SMEs do not expect their employee numbers to increase, as employment costs account for a major proportion of business expenditure."

Wales, along with the West Midlands, and the north-west are the most confident regions, and the majority of survey respondents view expanding market share as the most important factor to achieving growth.

The survey also questioned issues that have a negative impact upon a company's ability to grow.

The most common response was the volumes of new legislation being introduced and over-regulation.